AK Senate Majority members answer questions about budget cuts

On Tuesday morning, members of the Senate Finance Committee from the Republican-controlled majority held a press conference defending their cuts to the state’s operating and capital budgets, including a controversial cut to education that includes the Mat-Su Borough School District.  KTNA’s Phillip Manning has more.

When asked why they were holding a special press-conference on Tuesday, members of the majority caucus on the Senate Finance committee said that they felt it necessary to emphasize the severity of the state’s revenue shortfall.  Pete Kelly, a Fairbanks Republican, says that the days of looking ahead to a ‘fiscal cliff’ are over.

“We’ve hit the fiscal cliff. We’ve fallen off the fiscal cliff.  This is it;  the time is now that we always talked about.  And, this budget cycle, we have tried to respond to the fact that we’ve fallen off the cliff, and we’re trying to save Alaska’s financial future.”

Other members of the majority expressed similar sentiments, including referring to Alaska’s state revenue outlook as ‘a sinking ship.’  As a result of the projected shortfall of more than $3.5 billion, the Senate Finance Committee took significant cuts out of the operating budget.  The last cut has proven perhaps the most controversial:  A reduction in the base spending for education statewide.  One-time funding that was set up last year by the legislature and was scheduled to run for three years had already been removed in Governor Bill Walker’s budget proposal.  The additional cuts from Senate Finance amount to about $47 million during the next fiscal year.  Senator Anna MacKinnon, an Eagle River Republican, says that education makes up a large portion of state spending, and cannot be taken off the table for cuts.

“…And we need educators, we need principals, we need municipalities, we need villages understanding that there isn’t more money at this time, and if we choose to put more money there, it’s next year’s classroom that is going to be impacted even more.  We don’t have it.”

Last month, David Teal, director of the non-partisan Legislative Finance Division, told legislators that even cutting state funding to everything but debt service, Medicaid, K-12 education, and retirement fund obligations would not produce a balanced budget at current oil prices and production levels.  Since then, discussion in Juneau has begun on other revenue streams.  Senator Mike Dunleavy, a Mat-Su Republican whose district includes the Upper Susitna Valley, says that more discussions of revenue streams will likely begin after the current legislative session.

“There are people in their offices and having discussions about what the state is going to look like in terms of revenue in the future.  It’s just, right now—our job is to reduce, right now.”

Tuesday’s press conference came as the joint committee of House and Senate Finance members works to reconcile the differences in each body’s budget.  Some in the House Majority have said they do not like the level of education cuts included in the Senate’s version.

As it stands, those cuts would impact every district in the state, including the Mat-Su Borough.  According to a presentation given to the Mat-Su Borough School Board last week, the Senate’s level of funding would mean an $11.9 million deficit based on current spending proposals.  That assumes that the Mat-Su Borough increases its contribution to the district as well.  If that does not happen, MSBSD staff project a $13.4 million shortfall.

Over the past few years, the borough has been willing to increase funding for the school district by about three percent per year.  Last year, that increase came in the form of the Assembly allowing the school district to hold on to unspent funds that would have otherwise lapsed back to the borough. The Mat-Su Borough’s budget discussions begin next week, and public meetings are scheduled for May.